Recommended Actions

Use MIT’s Living Wage Calculator, which estimates the living wage based on expenses needed to support families of 12 different compositions. Calculation is available by US metro area, county, state, region or at the national level.

We recommend using the wage for a single adult with no children as the minimum standard for policy and practice change. This should be taken from your job quality strategy.

The program or funding stream to target will depend on which programs your agency supervises, population served, and partners. Wage subsidy programs to target include:

• Workforce Innovation and Opportunity Act (WIOA) funded on-the-job-training contracts

• Temporary Assistance for Needy Families Subsidized Employment contracts

• Community Development Block Grant (CDBG) program

• Other federal, state and locally funded programs

Review the selected program’s wage subsidy expenditures for the last three years to determine what portion of the program’s budget is currently subsidizing living wage jobs. Calculate this as a percentage of the total budget and in dollars. This information should be available by comparing the living wage calculated in "Define a Living Wage" segment above against the reimbursement contracts  (e.g., the employer on-the-job training contract) that state the agreed upon wage and the invoices for hours worked, which show what has been paid out.

Allocate a percentage or dollar amount of the selected program’s wage subsidy budget to living wages. To formalize this goal, you may find it helpful to establish a working group of key stakeholders to develop a draft policy for approval. This working group should include a mix of business representatives, worker advocates and agency staff working together to keep the conversation focused on job quality strategy. This Minneapolis Living Wage and Responsible Public Spending Ordinance is a useful example of a city-level ordinance. The Living Wage Provisions--Equitable Development Toolkit from All-In-Cities also provides examples of how a variety of localities have approached policy/ordinance development.

In addition to hourly and salaried employees, it’s important to consider other types of workers who are often disproportionately represented in low-quality jobs. For example:

• Tipped Workers disproportionately benefit from increases in minimum wages, and living wage ordinances also improve wages for their non-tipped colleagues
• Independent contractors in Florida and Richmond (VA) also raise the living wage standard for independent contractors to account for additional taxes these workers pay

Determine qualified deductions, if any. Many living wage ordinances (LWOs) and programs allow employers to deduct tangible benefits like health insurance, typically $1 to $2 per hour (e.g., Minneapolis, Richmond, Santa Clara). Conversely, some LWOs stipulate that employers must cover benefits or raise their hourly wage (e.g., Berkeley). See living wage ordinance for more details. 

Define other job requirements, such as paid leave, stable and predictable schedules and other job quality necessities and features. Beyond increasing the value of workers’ paychecks, job quality requirements through subsidized wage contracts can promote greater economic stability for individuals by requiring employers to provide a certain number of paid sick days and vacation days for employees.

Here are some sample metrics to get you started:

• Percentage of subsidized wage funds spent on jobs that pay a living wage for jurisdiction (for a single adult with no children)

• Number of workers placed in living wage jobs through wage subsidy program

• Percentage of subsidized wage funds going to jobs with living wage plus other job quality necessities/features

• Number of businesses increasing job quality (wage or something else) to become eligible for a wage subsidy program

Train business services staff to discuss this change with existing business clients  and develop strategies to bring in new employers willing to pay a living wage to receive a training subsidy. Once the policy goes into effect, there is a risk that a large number of long-term employer partners entering into subsidized wage contracts will drop off and expenditure rates for the subsidy program will decrease. 

Want to see more information about the challenges you may face as you implement this change and how to address them? Go here.

Establish a cadence for updates. It is important to review and update the living wage amounts every one to two years or more frequently when there are significant shifts in the market. While the cost of living (and therefore living wage) usually increases every year, it can be helpful to keep standards consistent for at least two years where possible to reduce the administrative burden of running the program. Regardless of what cadence you choose, make it clear up front and provide ample time for employers and the program to adjust when the standards increase.